Duty to Mitigate — Ontario Employment Law
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About Duty to Mitigate
In Ontario employment law, the "duty to mitigate" refers to the legal obligation of a terminated employee to actively search for and accept comparable new employment. When an employer fires someone without cause or triggers a constructive dismissal, they are typically liable for common law reasonable notice. However, the law does not allow former workers to simply sit back and collect severance for the duration of that notice period. Instead, employees must take reasonable steps to replace their lost income.
Fulfilling this duty requires making a genuine, documented effort to find a job similar to the one lost. This means looking for a role with comparable duties, status, compensation, and working conditions. If an employee successfully finds a new job during their notice period, the income earned is generally deducted from the original employer's severance obligations. Conversely, if an employer can prove in court that an employee failed to mitigate—for instance, by turning down an equivalent job offer or putting zero effort into a job hunt—a judge may significantly reduce the employee's severance award by the amount they could have earned.
It is important to understand that the duty to mitigate applies to common law reasonable notice, but it does not apply to the statutory minimum notice and severance pay outlined in Ontario's Employment Standards Act, 2000 (ESA). An employee is entitled to their ESA minimums regardless of whether they find a new job the very next day.
Courts look at the specific circumstances of each termination when assessing this obligation. Employees do not have to accept a massive demotion or move across the country just to find work. Similarly, while employees are sometimes expected to accept a temporary role with their former employer to mitigate losses, courts have ruled that no one is required to return to a poisoned or toxic work environment, such as one where an employer secretly installed surveillance video. Because evaluating what qualifies as "comparable employment" and deciding whether to accept or reject an offer involves high stakes, it is always wise to seek independent guidance from an Ontario employment lawyer to ensure you are protecting your severance rights.
Frequently Asked Questions
Do I have to accept a job with lower pay to fulfill my duty to mitigate?
Generally, no. The law requires you to search for "comparable" employment. You are not obligated to accept a position that offers significantly lower compensation, reduced status, or entirely different duties, though your obligations might shift if a prolonged job search yields no comparable roles.
Are my ESA minimum severance payments affected if I find a new job right away?
No. Your minimum entitlements to notice and severance pay under the Employment Standards Act, 2000 (ESA) are guaranteed. The duty to mitigate, and any corresponding deductions for new income, only applies to your common law reasonable notice claims.
Can my old employer force me to return to my old job to mitigate my damages?
In some constructive or wrongful dismissal cases, courts have held that an employee should accept an offer to return to their former employer to mitigate damages while looking for other work. However, this is not required if the workplace environment is toxic, deeply hostile, or the relationship is fundamentally broken (for example, if the employer was caught secretly recording the employee).
Does starting my own business count as mitigating my damages?
It can. If there is no comparable employment available, or you face immense difficulty in the job market, taking reasonable steps to start your own business can satisfy the duty. However, courts will scrutinize whether turning down comparable employment offers in favor of a risky business venture was a reasonable choice.
What actually happens if a judge decides I failed to mitigate?
If your former employer proves you failed in your duty, the court will estimate what you would have earned had you accepted a reasonable role. Your common law damages will then be reduced by that estimated amount, which can drastically lower your final severance payout.
When should I consult an employment lawyer regarding my job search?
It is best to reach out to a professional immediately after you are terminated. Understanding exactly what kinds of job offers you can safely reject without breaching your duty to mitigate is a complex legal assessment that requires early, strategic legal counsel.
Common Scenarios
- A senior executive is wrongfully dismissed and offered an almost identical role at a competing firm a few weeks later. Because they want to take a break from the industry, they decline the offer. Their former employer successfully argues their severance should be reduced because they outright rejected comparable employment.
- An employee experiences severe discrimination and resigns, claiming constructive dismissal. The employer offers them their old job back while the lawsuit is pending, but the employee refuses. A court rules the employee fulfilled their duty because they cannot be forced to return to a poisoned workplace.
- A retail manager is terminated and immediately signs up for multiple job boards, applies to three realistic postings a week, and networks on LinkedIn. Despite not finding a job for six months, their meticulously kept job search spreadsheet proves they actively fulfilled their duty to mitigate.
What You Should Know
- Maintain a highly detailed 'mitigation diary' tracking every application you submit, interviews attended, and networking emails sent, as courts require hard evidence of your job search.
- Save all receipts for out-of-pocket expenses related to your job search, such as resume writing services or travel to interviews, as these mitigation expenses can often be claimed in a wrongful dismissal suit.
- Do not hastily reject a job offer that looks highly similar to your past role just out of spite or a desire for a change of pace; doing so could cost you thousands in lost severance.
- Before declining any alternative employment offer, have an Ontario employment lawyer review the details to ensure your refusal will not be weaponized against you by your former employer in court.
Featured Cases
H. v. Christie & Walther Communications Limited
2020 ONSC 7214 (CanLII) · 2020-11-25Wrongful Dismissal: 12-Month Notice and Mitigation
This wrongful dismissal case addressed the calculation of damages for a 12-month notice period, specifically focusing on the plaintiff's duty to mitigate. The court found that the plaintiff's rejection of a final employment offer from a successor employer was unreasonable and constituted a failure to mitigate, while also determining that self-employment income fully offset remaining damages.
M. v Erie Mutual
2016 ONSC 704 (CanLII) · 2016-02-02Constructive Dismissal Claim Dismissed: Commission Changes
This case addresses a claim of constructive dismissal where the plaintiff alleged that changes to the commission structure and working conditions constituted a repudiation of the employment contract. The court applied the test from Farber v. Royal Trust Co. and found no fundamental change to employment terms, dismissing the constructive dismissal claim. The court found 16 months was reasonable notice, rejecting the plaintiff's claim for 24, so the 18 months of working notice given was enough; refusing to keep working through it was an unreasonable failure to mitigate, leaving damages at nil.
C. v. Cornerstone Properties Inc.
2008 CanLII 66139 (ON SC) · 2008-12-15Constructive Dismissal: Secret Surveillance Leads to Damages Award
A constructive dismissal case where the employer installed a secret camera in the plaintiff’s office without her knowledge, leading to a finding of a poisoned workplace environment. The court awarded the plaintiff seven months’ notice period in damages, and determined that she fulfilled her duty to mitigate by seeking alternative employment without returning to the hostile work environment.
D. v. Ontario Power Generation Inc.
2007 CanLII 49486 (ON SC) · 2007-11-16Constructive Dismissal: 24-Month Notice Awarded in Ontario Case
A constructive dismissal case where the plaintiff alleged that changes to compensation, job responsibilities, and reporting structure constituted constructive dismissal. The court applied the Farber test and found the cumulative effect of the changes to be a constructive dismissal. The plaintiff was awarded 24 months’ notice, with damages reduced by income earned during the notice period, resulting in a total award of $698,287.00.
R. v. Stratford General Hospital
2007 CanLII 58483 (ON SC) · 2007-01-30Wrongful Dismissal and Withdrawn Resignation
A wrongful dismissal case where the plaintiff resigned due to stress but later withdrew the resignation before the employer acted on it. The court examined whether the withdrawal was bona fide and whether the employer’s refusal to reinstate constituted wrongful dismissal. The case also involved allegations of constructive dismissal due to a toxic work environment and excessive workload, as well as issues of mitigation of damages and bad faith dismissal.
A. v. Bosley Real Estate Ltd.
2003 CanLII 32919 (ON SC) · 2003-10-07Wrongful Dismissal: Employment Agreement Termination Provisions
A wrongful dismissal case involving the interpretation of employment agreements and termination provisions. The court held that the March 1, 2000 Document did not supersede the May 15, 1997 Letter, which required one month’s notice per year of service. The court found the notice period reasonable and that the plaintiff fulfilled their duty to mitigate damages.
H. v. Norampac Inc.
2003 CanLII 11626 (ON CA) · 2003-08-22Constructive Dismissal: On-Call Changes & Judicial Bias Appeal
This is an appeal to the Court of Appeal for Ontario from a trial judge's decision in a wrongful and constructive dismissal action. The appeal addresses whether the imposition of an unpaid on-call requirement constituted a material alteration of the employment contract and whether the trial judge's conduct raised a reasonable apprehension of bias. The court also considered the employee's duty to mitigate damages by accepting the new working conditions.
G. v. Wittnauer Worldwide L.P.
2002 CanLII 45073 (ON CA) · 2002-09-13Constructive Dismissal: Manager Removed from Office
This is an appeal from a trial judge's decision in a constructive dismissal case involving a manager whose duties were substantially reduced and who was removed from office. The Court of Appeal applied an objective test to determine that constructive dismissal occurred and rejected the argument that the appellant had a duty to remain at the workplace while seeking other employment. The court fixed the award of damages, adjusting the quantum to account for amounts owed by the appellant and costs.
G. v. Marleau, Lemire Securities Inc.
2000 CanLII 22616 (ON SC) · 2000-02-11Termination Case: Severance Provisions in Oral Employment Agreement
A termination of employment case where the plaintiff's employment was terminated following the liquidation of the defendant's securities business. The court examined whether a severance provision in an oral employment agreement was triggered, determined that no change in control occurred, and ruled that the plaintiff was entitled to agreed compensation for a guaranteed period. The case also addressed the duty to mitigate damages and its application to severance provisions.
S. v. Toronto Dominion Bank
1997 CanLII 12329 (ON SC) · 1997-05-15Constructive Dismissal: Senior Executive Awarded 13-Month Notice Damages
A constructive dismissal case involving a senior executive whose responsibilities were unilaterally reduced following the hiring of another executive. The court found that the changes constituted a fundamental breach of the employment contract, establishing constructive dismissal. The employee was awarded damages for a 13-month notice period, including salary, bonus, stock options, and benefits.
G. v. Ontario Municipal Employees Retirement Board
1995 CanLII 7288 (ON SC) · 1995-10-26Constructive Dismissal: Demotion and Contract Breach Case
A constructive dismissal case where the plaintiff alleged a fundamental breach of his employment contract due to a reorganization resulting in demotion and reduced responsibilities. The court examined whether the changes constituted constructive dismissal, whether the plaintiff condoned the changes, and the appropriate reasonable notice period. The case also addressed bonus entitlement and the duty to mitigate damages.
P. v. Algoma Publishers Ltd.
1995 CanLII 7277 (ON SC) · 1995-03-08Constructive Dismissal: Unilateral Wage Reduction Found Unreasonable
A constructive dismissal case where the employer unilaterally imposed a 10% wage reduction or reduced hours, and the court found these changes to be unreasonable. The case also addresses the reasonable notice period for a plaintiff with 29 years of service and the duty to mitigate damages by accepting reasonable offers of continued employment.
B. v. Second Cup Ltd.
1995 CanLII 7270 (ON SC) · 1995-01-19Constructive Dismissal: Reassignment at Reduced Salary Following Restructuring
A constructive dismissal case where the plaintiff, who was initially employed as Vice-President of Leasing and Franchising, was reassigned to separate roles with a reduced salary following organizational restructuring. The plaintiff refused the reassignment and ceased employment, leading to disputes over whether the reassignment constituted a fundamental breach of the employment contract and whether the plaintiff adequately mitigated his losses.
Cronk v. Canadian General Insurance Co.
1994 CanLII 7293 (ON SC) · 1994-06-14Wrongful Dismissal: Clerical Worker Awarded 20 Months Notice After 29 Years
A wrongful dismissal case involving a clerical worker dismissed without cause after 29 years of service. The court awarded 20 months' notice, rejecting the employer's argument that the plaintiff's clerical position warranted a shorter notice period. The decision emphasized the plaintiff's age, length of service, and limited employment prospects, applying the Bardal factors. The court also ruled on the plaintiff's duty to mitigate damages, finding their efforts reasonable given their age and location.
L. v. AEG Bayly Inc.
1994 CanLII 7411 (ON SC) · 1994-02-28Constructive Dismissal: Objective Test and Mitigation
This is a merits decision in a constructive dismissal case where the plaintiff alleged that the employer's conduct, including performance reviews and reassignment of duties, constituted a fundamental breach of the employment contract. The court determined that the test for constructive dismissal is objective, focusing on the employer's conduct rather than the employee's subjective perception, and found that the employer's actions did not amount to a fundamental change in employment. Although the employee's efforts to mitigate damages were deemed reasonable, the claim for constructive dismissal was dismissed.
C. v. Trusts and Guarantee Co.
1916 CanLII 507 (ON SC) · 1916-06-24Wrongful Dismissal: Employee Terminated Before Fixed-Term Contract Ends
A wrongful dismissal case involving an employee who was terminated before the expiration of a fixed-term employment contract. The court assessed damages at $4,000, considering the plaintiff’s inability to secure comparable employment and the principle that damages should be mitigated by the possibility of obtaining similar work. The court also ruled that profits from independent business ventures post-dismissal were not considered mitigation due to their distinct risks and responsibilities.